If there is no tariff on imported inputs and the value of these inputs is half the value of the final product, what is the effective tariff rate when the nominal tariff on the final product is 10%?

Explanation

Given that imported inputs have no tariff and constitute 50% of the final product's value, the effective tariff rate is higher than the nominal rate. The calculation is: Effective Tariff Rate = Nominal Tariff / (1 - ratio of imported inputs) = 10% / (1 - 0.5) = 20%. Hence, the effective tariff rate is 20%.